💻Your Medical Questions Answered—by Private Equity

As always, if there’s a sector or company you’d like me to dig into, drop me a note at [email protected].

Before we get into the investment thesis, let’s look at how Internet Brands makes money and how KKR repositioned the company around healthcare. 

1. Internet Brands is primarily a digital media / marketing services company with a portfolio of web properties across healthcare, auto, legal and “other”.

Founded in 1998 as CarsDirect.com, Internet Brands rapidly expanded into dozens of vertical websites (mainly auto, health, and legal), eventually going public in 2007. But in 2010, Internet Brands was taken private by Hellman & Friedman and JMI Equity for ~$640M, equating to a 14.5x EBITDA multiple. 

At the time of acquisition, the company was primarily focused on auto and travel, with healthcare as the lowest priority.

Website Properties in 2009

Internet Brands’ business model was simple:

2. Under KKR’s new ownership in 2014, Internet Brands quickly shifted the mix towards healthcare.

In June 2014 KKR reportedly paid $1.1B (~2x return in 4 years for H&F and JMI) to acquire Internet Brands. Under KKR, Internet Brands went on an acquisition spree in healthcare:

And today, the portfolio looks more balanced across the verticals

Top Website Properties by Vertical

3. Over time, Internet Brands added B2B SaaS & Education tools that were sold into its large community of healthcare providers and healthcare advertisers.

Additionally, KKR sold Internet Brand’s auto dealership software solution AutoData to Thoma Bravo for $1 billion 2019 to streamline the software portfolio to focus on healthcare (side note: Thoma Bravo would then merge AutoData with JD Power just a few months later to create another PE success story–reportedly valued at $8 billion as of 2024).

What started out as a portfolio of auto-focused websites has transformed into a healthcare conglomerate consisting of both a large digital media portfolio as well as B2B SaaS / education portfolio.

Investment Thesis

KKR’s pivot to healthcare made strategic sense on several levels:

1. Diversifying from a Cyclical Sector

The US healthcare industry spent ~$20 billion in digital advertising in 2024. And while the auto industry is just as large at ~$19 billion digital ad spend as of 2023, the spend is much more cyclical (as seen by the dip in ad spend in 2020 as well as decline in auto sales 2007-2009).

2. Publicly Available Target in WebMD–the Most Popular Web Property

By 2007, WebMD had become the most popular health web property with 17 million unique monthly visits and grew to over 150 million unique monthly visitors at its peak by 2014 (nearly ½ of the U.S. population, supporting my suspicion that I wasn’t the only one going down the WebMD rabbit hole!).

However, by 2017, WebMD was facing performance issues and also increasing pressure from activist investors including the Blue Harbour Group, which had accumulated ~9% ownership in the company.

After running a “strategic review”, the company was eventually sold to Internet Brands for $2.8 billion (~12x EBITDA).

WebMD not only brought on immediate scale in healthcare but at a reasonable multiple. 

3. Larger, More Diverse Software Market

The healthcare IT market is much larger than auto–per Grand View Research, the U.S. Healthcare IT software market is estimated at over $150 billion, whereas the global auto software market is estimated at ~$30 billion.

This is driven by the diversity as well as fragmentation in healthcare vs. auto: 

4. Massive Owned Audience–Built-In Distribution channel

With platforms like WebMD and Medscape, Internet Brands owns distribution channels that reach nearly every stakeholder in the healthcare system:

In summary, with the healthcare pivot, KKR has been able to:

1. Diversify its advertising revenue streams away from cyclical auto segment into more stable, but equally large healthcare segment;

2. Leverage its owned audience distribution channel to mass-market and cross-sell software and education tools, which in turn;

3. Not only resulted in lower customer acquisition costs for the software sales but also boosted customer lifetime value as more and more products were sold into the same customer base.

KKR pulled off this transformation while also unlocking value from an overlooked asset—selling Internet Brands’ auto software division, Autodata Solutions, to Thoma Bravo for $1 billion. That sale alone nearly offset the $1.1 billion KKR had originally paid to acquire the entire company.

Despite the successful pivot, a transformative acquisition in WebMD, and recent recapitalization at a $12 billion valuation, the road ahead isn’t necessarily bullish.

One sign of trouble is how WebMD’s web traffic has trended. Compared to its peak of 150 million monthly unique visitors in 2017, the company generated only ~57 million unique visitors in April 2025 and has been taken over as the most visited medical site by Healthline (which is owned by Red Ventures–a Silverlake and General Atlantic backed platform).

It’s unclear what the next strategy is following Warburg’s investment. Perhaps they will try to buy media assets from Red Ventures or create another media-to-software conglomerate in other verticals such as legal.

It’s not just healthcare providers that have been rolled up—private equity has also consolidated how we consume medical information and find providers in the first place.

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